Report Faults Ex-Chief of Defense Institute

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By R. Jeffrey Smith
Washington Post Staff Writer
Wednesday, December 20, 2006

The Defense Department's inspector general has concluded that the former head of the Institute for Defense Analyses violated conflict-of-interest rules when he failed to distance himself from two reports that could have affected companies in which he had a financial interest.

The IDA is a government-funded independent organization that evaluates defense programs for the Pentagon. In a report, the inspector general found that retired Navy Adm. Dennis C. Blair had not altered the conclusions of two IDA reports on the F-22 fighter, in August 2005 or May 2006, nor had he abused his position as IDA president for personal benefit.

But the inspector general's report said Blair was aware of the rules and had chosen not to disqualify himself in the review of the fighter aircraft.

Blair, who resigned from his post when the institute's board of trustees reached a similar conclusion in September, was allowed to serve on the boards of directors of two subcontractors to the F-22 program -- EDO Corp. and Tyco International Ltd. -- when he joined the IDA.

He also owned EDO stock and received stock options as compensation for his work on the company's board. The company had contracts worth at least $38 million to build four to six missile launchers for each of 48 F-22 fighters. Tyco made small electronic components sold to F-22 subcontractors.

One of the IDA studies underpinned a controversial Pentagon decision this spring to approve a multiyear contract for the F-22. Questions surrounding Blair's role attracted interest on Capitol Hill and concerned Lockheed Martin Corp., its principal manufacturer.

In October, Congress nonetheless endorsed the Pentagon's decision, on the condition that the defense secretary certifies that multiyear production would bring lower costs than traditional yearly purchases.

In an interview, Blair said the inspector general concluded that "I had no involvement" in the second of the two reports, which covered the F-22 multiyear procurement issues. "With due respect to the inspector general, I find it difficult to understand how I can be criticized for a conflict of interest involving a study in which I had no involvement," he said.

The inspector general's report said Blair told investigators that he was unaware of Tyco's role in the F-22 program at the time of the IDA's F-22 studies. After his link to EDO and the two IDA reports were criticized by the Project on Government Oversight, a nonprofit watchdog group, Blair resigned from the EDO board, donated his EDO shares to a fund that benefits injured military veterans, and forfeited his remaining stock options, according to the Pentagon report.

On the study of F-22 costs, Blair acknowledged to investigators that he had signed a task order spelling out the study's parameters and then participated in three meetings at which he and other members of a senior review group discussed its preliminary findings. Blair said he did not direct the outcome, help draft the language of the report or participate in a final review.

Six IDA analysts "generally corroborated Blair's recollections," the Pentagon report said. But his membership in the review group nonetheless "presented an actual conflict of interest" because IDA rules, which Blair signed at the time he took the job, required his disqualification from any duties or activities involving an organization in which he served as a director, according to the report. It said he did not consult with others about his conflict before joining the review group.

With regard to the multiyear-procurement study, Blair testified that he signed the original project task order, received periodic status updates and read a copy of the final report. But he said he provided no guidance and requested no changes, a statement that the Pentagon report said was again corroborated by the six IDA analysts.

Blair told investigators that he gave a different account in July to The Washington Post -- when he said no conflict-of-interest policy existed at the IDA -- because he had confused the two studies and had a "faulty memory" about his role.

Pentagon investigators, nevertheless, concluded that he was in a position to influence the results of the second IDA study, even though he did not, and should have disqualified himself. The IG report also faulted the defense institute, which is funded by the Pentagon, for what it said was insufficient oversight of its conflict-of-interest policy.


© 2006 The Washington Post Company

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